It's providing up to $1.2 billion to make up an extra one percent pay rise on top of any other wage increases, on the condition that aged care providers have enterprise bargaining agreements with their staff.

The money was set aside last year. The Minister for Ageing Mark Butler told Alexandra Kirk that employers in the sector will be required to do that to qualify for the extra money to be used to top up the wages of their staff.

MARK BUTLER: We know that wages are the major reason why the sector is struggling to get and then to keep workforce that we need in aged care today - and importantly, the vastly growing work force we're going to need in coming years.

Lifting wages, we know from Productivity Commission advice and from consistent advice from the aged care sector itself, is the most important way to make sure we have the aged care workforce that the community needs.

MARK BUTLER: Depends really what the starting point is, but aged care staff who are on the minimum award wage will be getting almost 19 per cent over four years if they're personal care workers, and more than that if they're enrolled nurses or registered nurses.

ALEXANDRA KIRK: Your money is going to boost wages by what, 1 per cent a year. But how much are you asking employers to boost their workers' wages by?

MARK BUTLER: Well, if their workers are still on the minimum award rate - which for a carer is about $18.50 an hour - then we're also expecting them to lift that award rate by 3 per cent over a couple of years and to also make sure that there's a minimum yearly increase in additions in the money that we're paying.

So this means that in the first couple of years, a personal carer on a minimum award rate will be getting a yearly increase of about 5.25 per cent, which is a significant increase, to make sure that they're up to a rate which we think the market would reflect.

ALEXANDRA KIRK: It's fair enough for the Commonwealth to decide how it wants to employ people but Catholic Health Australia, which operates a large number of aged care facilities, says that service providers should be allowed to make their own work force arrangements, so the Government shouldn't stipulate that.

MARK BUTLER: Well it's very clear. This is also a piece of advice that we got from the National Aged Care Alliance in the lead-up to the policy, an alliance which includes all of the major provider groups, including Catholic Health Australia, and also advice that we got from the productivity commission.

So the most important thing for consumers and families, according to a survey of national seniors, is for us to lift the wages and improve the recruitment and retention of aged care staff.

ALEXANDRA KIRK: What about the cost to the aged care sector of re-negotiating industrial agreements?

MARK BUTLER: Well... well I mean there'll be a very standard set of clauses for enterprise agreements. A very significant number, I think well more than half of enterprise agreements currently in place, are due for renegotiation now.

So this really should not be a significant impost on the sector and it's the only legal arrangement to ensure that the increase in wages that are reflected in this contract are legally enforceable.

MARK BUTLER: Well employers and aged care unions also undertook a number of other negotiations around things like casualisation in the sector, training, and so on and so forth. And we've only incorporated into the contract those clauses about those matters that were completely agreed between those parties.

ALEXANDRA KIRK: What sort of things?

MARK BUTLER: Things like conversion of casual workers to permanent part-time employment after working for a typical period of time, the need to continue to train workers in the sector - although that manner of implementing that commitment is left up to particular employers, in line with advice from the employers who are part of those negotiations.

Things like that - non wage matters that go to the objective that we have as a government of improving the recruitment and retention of the aged care work force that we need.

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